David Solomon, Chairman & CEO Goldman Sachs, speaking on CNBC’s Squawk Box at the World Economic Forum Annual Meeting in Davos, Switzerland on Jan. 17th, 2024.
Adam Galici | CNBC
Goldman Sachs is scheduled to report third-quarter earnings before the opening bell Tuesday.
Here’s what Wall Street expects:
Earnings: $6.89 per share, according to LSEG
Revenue: $11.8 billion, according to LSEG
Trading Revenue: Fixed Income of $2.91 billion, Equities of $2.96 billion, per StreetAccount
Investing Banking Revenue: $1.62 billion, per StreetAccount
Asset & Wealth Management: $3.58 billion, per StreetAccount
How much will falling interest rates help Goldman Sachs?
Over the past two years, the Federal Reserve’s tightening campaign has made for a less-than-ideal environment for investment banks like Goldman.
Now that the Fed is easing rates, that positions Goldman to benefit as corporations that have waited on the sidelines to acquire competitors or raise funds begin to take action.
Goldman’s asset and wealth management division is also positioned to benefit from rising asset values across markets as rates decline.
Last week, rival JPMorgan Chase set expectations high with better-than-anticipated results from trading and investment banking, factors that helped the bank top earnings estimates.
Wells Fargo also exceeded estimates on Friday on the back of its investment banking division.
This story is developing. Please check back for updates.
A New York Community Bank stands in Brooklyn, New York City, on Feb. 8, 2024.
Spencer Platt | Getty Images
New York Community Bank on Wednesday posted a quarterly loss of $335 million on a rising tide of soured commercial loans and higher expenses, but the lender’s stock surged on its new performance targets.
The first-quarter loss, equal to 45 cents per share, compared to net income of $2.0 billion, or $2.87 per share a year earlier. When adjusted for charges included merger-related items, the loss was $182 million, or 25 cents per share, deeper than the 15 cents per share loss estimate from LSEG.
“Since taking on the CEO role, my focus has been on transforming New York Community Bank into a high-performing, well-diversified regional bank,” CEO Joseph Otting said in the release. “While this year will be a transitional year for the company, we have a clear path to profitability over the following two years.”
The bank will have higher profitability and capital levels by the end of 2026, Otting said. That includes a return on average earning assets of 1% and a targeted common equity tier 1 capital level of 11% to 12%.
Otting took over at the beleaguered regional bank at the start of April after an investor group led by former Treasury Secretary Steven Mnuchin injected more than $1 billion into the lender.
Shares of the bank jumped 15% in premarket trading.
This story is developing. Please check back for updates.
Citigroup on Friday posted a $1.8 billion fourth-quarter loss after booking several large charges tied to overseas risks, last year’s regional banking crisis and CEO Jane Fraser’s corporate overhaul.
All told, the charges — so massive the bank preannounced their effect this week — hit quarterly earnings by $4.66 billion, or $2 per share, Citigroup said. Excluding their effect, earnings would’ve been 84 cents a share, the bank said.
Here’s what the company reported versus what Wall Street analysts surveyed by LSEG, formerly known as Refinitiv, expected:
Earnings: 84 cents a share, adjusted, may not compare with 81 cents, expected.
Revenue: $17.44 billion vs. $18.74 billion expected.
Fraser called her company’s performance “very disappointing” because of the charges but said Citigroup had made “substantial progress” simplifying the bank last year.
The CEO announced plans for a sweeping corporate reorganization in September after previous efforts failed to boost the bank’s results and share price. On Friday, Citi said it expects to cut its headcount by 20,000 and post up to $1 billion in severance costs over the medium term.
Citigroup previously said it would exit municipal bond and distressed debt trading operations as part of the streamlining exercise. Earlier this week, the company said it booked bigger charges in the quarter than previously disclosed by Chief Financial Officer Mark Mason.
Citigroup revenue slipped 3% to $17.44 billion in the quarter, though the bank said revenue rose 2% after excluding the effect of divestitures and charges tied to exposure to Argentina. Despite the noise, Citi’s institutional services operations, U.S. personal banking and investment banking performed well, according to the bank.
“Citigroup’s earnings looked awful with a big loss of $1.8 billion, but the bank’s underlying business showed resilience,” Octavio Marenzi, CEO of consulting firm Opimas LLC, said in an email. Fraser will be under mounting pressure to deliver results this year, he added.
Shares of Citigroup rose 2% during premarket trading.
Jamie Dimon, CEO of JPMorgan Chase, testifies during the Senate Banking, Housing and Urban Affairs Committee hearing titled Annual Oversight of Wall Street Firms, in the Hart Building on Dec. 6, 2023.
Tom Williams | Cq-roll Call, Inc. | Getty Images
JPMorgan Chase reported fourth-quarter earnings before the opening bell Friday.
Here’s what the company reported compared with what Wall Street analysts surveyed by LSEG, formerly known as Refinitiv, were expecting:
Earnings per share: $3.04, may not compare with expected $3.32
Revenue: $39.94 billion, vs. expected $39.78 billion
JPMorgan will be watched closely for clues on how banks fared amid volatile interest rates and rising loan losses.
While the biggest U.S. bank by assets has navigated the rate environment capably since the Federal Reserve began raising rates in early 2022, smaller peers have seen their profits squeezed.
The industry has been forced to pay up for deposits as customers shift cash into higher-yielding instruments, squeezing margins. At the same time, rising yields mean the bonds owned by banks fell in value, creating unrealized losses that pressure capital levels.
Concern is also mounting over rising losses from commercial loans, especially office building debt, and higher defaults on credit cards.
Beyond guidance on net interest income and loan losses for this year, analysts will want to hear what CEO Jamie Dimon has to say about the economy and banks’ efforts to tone down coming increases in capital requirements.
Wall Street may provide some help this quarter, with investment banking revenue higher than a year earlier, while trading may be “flattish,” JPMorgan said last month at a conference.
Beaten-down shares of banks recovered in November on expectations that the Fed had successfully managed inflation and could cut rates this year.
Shares of JPMorgan jumped 27% last year, the best showing among big bank peers and outperforming the 5% decline of the KBW Bank Index.
Morgan Stanley Chairman and Chief Executive James Gorman speaks during the Institute of International Finance Annual Meeting in Washington, October 10, 2014.
Joshua Roberts | Reuters
Morgan Stanley posted third-quarter results Wednesday that topped profit estimates on better-than-expected trading revenue.
Here’s what the company reported:
Earnings per share: $1.38, vs. $1.28 estimate from LSEG, formerly known as Refinitiv
Revenue: $13.27 billion, vs. expected $13.23 billion
Profit fell 9% to $2.41 billion, or $1.38 a share, from a year ago, the New York-based bank said in a statement. Revenue grew 2% to $13.27 billion, essentially matching expectations.
The bank’s shares fell more than 5% in early trading.
Morgan Stanley’s trading operations helped offset revenue misses elsewhere at the firm. The bank’s bond traders produced $1.95 billion in revenue, roughly $200 million more than the StreetAccount estimate, while equity traders brought in $2.51 billion in revenue, $100 million more than expected.
But the bank’s all-important wealth management division generated $6.4 billion in revenue, below the estimate by more than $200 million, as compensation costs in the division rose.
Investment banking accounted for another miss in the quarter, producing $938 million in revenue, below the $1.11 billion estimate, as the company cited weakness in mergers and IPO listings. The bank’s investment management division essentially met expectations with $1.34 billion in revenue.
Morgan Stanley shares have been under pressure this year.
CEO James Gorman cited a “mixed” environment for his businesses and acknowledged that the firm’s wealth management division gathered fewer new assets than in recent quarters. That’s because surging interest rates have made money market funds and Treasuries attractive, he told analysts Wednesday. The wealth management business was still tracking to hit his three-year goal of generating $1 trillion in new assets, he added.
“When people have a choice of making a 4%, 5% return by doing nothing, they’re not going to be trading in the markets,” Gorman said.
Led by Gorman since 2010, Morgan Stanley has managed to avoid the turbulence afflicting some rivals lately. While Goldman Sachs was forced to pivot after a foray into retail banking and as Citigroup struggles to lift its stock price, the main question at Morgan Stanley is about an orderly CEO succession.
In May, Gorman announced his plan to resign within a year, capping a successful tenure marked by massive acquisitions in wealth and asset management. Morgan Stanley’s board has narrowed the search for his successor to three internal executives, he said at the time.
Gorman reiterated his desire to hand over the CEO position to a successor within months.
“This firm is in excellent shape notwithstanding the geopolitical and market turmoil that we find ourselves in,” Gorman said. “My hope and expectation is to hand over Morgan Stanley with as clean a slate as possible and deal with a few of our outstanding issues in the next couple of months.”
Last week, JPMorgan Chase, Wells Fargo and Citigroup each topped expectations for third-quarter profit, helped by low credit costs. Goldman Sachs and Bank of America also beat estimates on stronger-than-expected bond trading results.
This story is developing. Please check back for updates.
Bank of America topped estimates for third-quarter profit on Tuesday on stronger-than-expected interest income.
Here’s what the company reported:
Earnings per share: 90 cents vs. expected 82 cent estimate from LSEG, formerly known as Refinitiv
Revenue: $25.32 billion, vs. expected $25.14 billion
Profit rose 10% to $7.8 billion, or 90 cents per share, from $7.1 billion, or 81 cents a share, a year earlier, the Charlotte, North Carolina-based bank said in a release. Revenue climbed 2.9% to $25.32 billion, edging out the LSEG estimate.
Bank of America said interest income rose 4% to $14.4 billion, roughly $300 million more than analysts had anticipated, fueled by higher rates and loan growth.
CEO Brian Moynihan said the bank continued to add clients despite economic pressures. While consumer banking deposits were down 8% in the quarter, the segment posted a 6% increase in revenue to $10.5 billion, according to the company.
“We did this in a healthy but slowing economy that saw U.S. consumer spending still ahead of last year but continuing to slow,” he said in an earnings release.
Bank of America was supposed to be one of the biggest beneficiaries of higher interest rates this year. Instead, the company’s stock has been the worst performer among its big-bank peers in 2023. That’s because, under CEO Brian Moynihan, the lender piled into low-yielding, long-dated securities during the pandemic. Those securities lost value as interest rates climbed.
That’s made Bank of America more sensitive to the recent surge in the 10-year Treasury yield than its peers — and more similar to some regional banks that are also nursing underwater bonds. Bank of America had more than $100 billion in paper losses on bonds at midyear.
The situation has pressured the bank’s net interest income, or NII, which is a key metric that analysts will be watching this quarter. In July, the bank’s CFO, Alistair Borthwick, affirmed previous guidance that NII would be roughly $57 billion for 2023.
Bank of America shares were up about 1% in premarket trading Tuesday. The stock bad fallen 18% this year through Monday, trailing the 10% gain of rival JPMorgan Chase.
Last week, JPMorgan, Wells Fargo and Citigroup each topped expectations for third-quarter profit, helped by better-than-expected credit costs. Morgan Stanley posts results Wednesday.
This story is developing. Please check back for updates.
David Solomon, chief executive officer of Goldman Sachs Group Inc., at the Goldman Sachs Financial Services Conference in New York, Dec. 6, 2022.
Michael Nagle | Bloomberg | Getty Images
Goldman Sachs is scheduled to report third-quarter earnings before the opening bell Tuesday.
Here’s what Wall Street expects:
Earnings: $5.31 a share, according to LSEG, formerly known as Refinitiv
Revenue: $11.19 billion
Trading revenue: fixed income $2.8 billion, equities $2.73 billion, per StreetAccount
Investment banking revenue: $1.48 billion
Is Wall Street deal-making on the mend?
Among its big bank peers, Goldman Sachs is the most reliant on investment banking and trading revenue.
While it’s made efforts under CEO David Solomon to diversify its revenue stream, first in an ill-fated retail banking push and later as it emphasized growth in asset and wealth management, it is Wall Street that powers the company. Last quarter, trading and advisory accounted for two-thirds of Goldman’s revenue.
That’s been a headwind as mergers, initial public offerings and debt issuance all have been muted this year as the Federal Reserve boosted interest rates to slow the economy down. With signs that activity has picked up lately, analysts will be eager to hear about Goldman’s pipeline of deals.
At the same time, Goldman has taken hits from two areas: Its strategic retrenchment away from retail banking has saddled the firm with losses as it finds buyers for unwanted operations, and its exposure to commercial real estate has resulted in write-downs as well.
Last week, Goldman said that its sale of lending business GreenSky will result in a 19 cents per share hit to third-quarter results.
Analysts will be keen to hear Solomon’s view on the investment banking outlook, as well as how the remaining parts of its consumer effort — mainly, its Apple Card business — fit in the latest iteration of Goldman Sachs.
Goldman shares have dropped 8.4% this year through Monday, a better showing than the 21% decline of the KBW Bank Index.
Last week, JPMorgan, Wells Fargo and Citigroup each topped expectations for third-quarter profit, helped by better-than-expected credit costs. Morgan Stanley posts results Wednesday.
This story is developing. Please check back for updates.
Goldman Sachs on Wednesday posted profit below analysts’ expectations amid write-downs tied to commercial real estate and the sale of its GreenSky lending unit.
Here’s what the company reported:
Earnings: $3.08 a share vs. $3.18 a share Refinitiv estimate
Revenue: $10.9 billion, vs. $10.84 billion estimate
Second-quarter profit fell 58% to $1.22 billion, or $3.08 a share, on steep declines in trading and investment banking and losses related to GreenSky and legacy investments, which sapped about $3.95 from per share earnings. Revenue fell 8% to $10.9 billion.
The company disclosed a $504 million impairment tied to GreenSky and $485 million in real estate write-downs. Those charges flowed through its operating expenses line, which grew 12% to $8.54 billion.
Shares of the bank climbed less than 1%.
Goldman CEO David Solomon faces a tough environment for his most important businesses as a slump in investment banking and trading activity drags on. On top of that, Goldman had warned investors of write-downs on commercial real estate and impairments tied to its planned sale of fintech unit GreenSky.
Unlike more diversified rivals, Goldman gets the majority of its revenue from volatile Wall Street activities, including trading and investment banking. That can lead to outsized returns during boom times and underperformance when markets don’t cooperate.
Exacerbating the situation, Solomon has spent the past few quarters retrenching from his ill-fated push into consumer banking, which has triggered expenses tied to shrinking the business.
“This quarter reflects continued strategic execution of our goals,” Solomon said in the earnings release. “I remain fully confident that continued execution will enable us to deliver on our through-the-cycle return targets and create significant value for shareholders.”
The bank put up a paltry 4.4% return on average tangible common shareholder equity in the quarter, a key performance metric. That is far below both its own target of at least 15% and competitors’ results including JPMorgan Chase and Morgan Stanley, which put up returns of 25% and 12.1% respectively.
Trading and investment banking have been weak lately because of subdued activity and IPOs amid the Federal Reserve’s interest rate increases. But rival JPMorgan posted better-than-expected trading and banking results last week, saying that activity improved late in the quarter, and that raised hopes that Goldman might exceed expectations.
Goldman’s results “reflect the limitations of a business mix that relies more heavily on investment banking and principal investments,” David Fanger of Moody’s Investors Service said in an e-mailed statement. “When client activity remains weak and higher interest rates are pressuring valuations, earnings decline more than at a bank with higher recurring revenues.”
Fixed income trading revenue fell 26% to $2.71 billion, just under the $2.78 billion estimate of analysts surveyed by FactSet. Equities trading revenue was essentially unchanged from a year earlier at $2.97 billion, topping the $2.42 billion estimate.
Investment banking fees fell 20% to $1.43 billion, just below the $1.49 billion estimate.
Asset and wealth management revenue fell 4% to $3.05 billion as the firm booked losses in equity investments and lower incentive fees.
Analysts will likely ask Solomon about updates to his plan to exit consumer banking. Goldman has reportedly been in discussions to offload its Apple Card business to American Express, but it’s unclear how far those talks have advanced.
Goldman shares have dipped nearly 2% this year before Wednesday, compared with the approximately 18% decline of the KBW Bank Index.
Brian Moynihan, CEO of Bank of America Corp., during a Senate Banking, Housing and Urban Affairs Committee hearing in Washington, D.C., Sept. 22, 2022.
Al Drago | Bloomberg | Getty Images
Bank of America on Tuesday posted second-quarter profit and revenue that edged out expectations as the company reaped more interest income amid higher rates.
Here’s what Bank of America reported:
Earnings: 88 cents a share vs. 84 cents a share Refinitiv estimate
Revenue: $25.33 billion vs. expected $25.05 billion
related investing news
The bank said earnings rose 19% to $7.41 billion, or 88 cents a share, from $6.25 billion, or 73 cents a share, a year earlier. Revenue climbed 11% to $25.33 billion, fueled by a 14% jump in net interest income to $14.2 billion, essentially matching the expectation of analysts surveyed by FactSet.
“We continue to see a healthy U.S. economy that is growing at a slower pace, with a resilient job market,” CEO Brian Moynihan said in the release. “Continued organic client growth and client activity across our businesses complemented beneficial impacts of higher interest rates.”
Bank of America shares climbed more than 4%.
The company’s Wall Street operations helped it top revenue expectations in the quarter. Fixed income trading revenue jumped 18% to $2.8 billion, edging out the $2.77 billion estimate, and equities trading slipped 2% to $1.6 billion, topping the $1.48 billion estimate.
Bank of America was expected to be one of the top beneficiaries of rising interest rates this year, but it hasn’t played out that way. The company’s net interest income, one of the main drivers of a bank’s revenue, has been questioned lately as loan and deposit growth has slowed. Last week, rival JPMorgan Chase posted a far stronger jump in net interest income that helped fuel a 67% surge in quarterly profit.
Still, CFO Alistair Borthwick told analysts Tuesday that net interest income would be slightly above $57 billion for the year, reaffirming the bank’s previous guidance.
BofA shares declined about 11% this year before Tuesday, compared with the approximately 20% decline of the KBW Bank Index.
This month, the Consumer Financial Protection Bureau said it fined the Charlotte, North Carolina-based bank for customer abuses including fake accounts and bogus fees. Analysts may ask Moynihan if the problems have been resolved.
Morgan Stanley CEO James Gorman participates in a conversation-style interview with Economic Club of Washington in Washington September 18, 2013.
Yuri Gripas | Reuters
Morgan Stanley on Wednesday topped estimates for first quarter profit and revenue on better-than-expected trading results.
Here’s how the company did:
Earnings of $1.70 per share, vs. $1.62 Refinitiv estimate
Revenue of $14.52 billion, vs. $13.92 billion estimate.
The New York-based bank said earnings fell 19% to $2.98 billion, or $1.70 a share, from a year earlier on declines in investment banking and trading. Companywide revenue slipped 2% to $14.52 billion.
As revenues dipped, expenses at the bank climbed 4% to $10.52 billion, mostly fueled by higher-than-expected compensation costs. Expenses came in $430 million higher than the StreetAccount estimate.
Higher costs helped hurt profit margins at the bank’s wealth division and investment bank, analyst Mike Mayo of Wells Fargo said in a research note. He also said that when excluding the benefit of a low tax rate, the bank would’ve earned $1.64 per share.
Shares of the bank dropped 3.8% in premarket trading.
Under CEO James Gorman, Morgan Stanley has become a wealth management giant thanks to a string of acquisitions. The bank gets most of its revenue from wealth and investment management, steadier businesses that help to offset volatile trading and banking results.
“The investments we have made in our wealth management business continue to bear fruit as we added a robust $110 billion in net new assets this quarter,” Gorman said in the earnings release. “Equity and fixed Income revenues were strong, although investment banking activity continued to be constrained.”
Wealth management revenue climbed 11% from the year-earlier period to $6.56 billion, matching the StreetAccount estimate. The increase was fueled by a rise in net interest income amid higher rates and loan growth, which offset lower asset management revenues as markets declined.
First-quarter trading revenue dipped from a year ago as Wall Street comes down from a pandemic-era boom, but Morgan Stanley’s traders managed to top expectations by roughly $250 million.
The bank’s fixed income traders produced $2.58 billion in revenue, exceeding the $2.33 billion StreetAccount estimate. Equities trading revenue of $2.73 billion edged out the $2.65 billion estimate.
Investment banking revenue dropped 24% to $1.25 billion on fewer completed M&A deals and lower stock and debt issuance, edging out the $1.2 billion estimate.
Finally, the bank’s smallest business, investment management, saw revenues drop 3% to $1.29 billion, just below the $1.34 billion estimate, as management fees decreased amid declining markets.
At the start of a conference call with analysts, Gorman addressed the turmoil sparked by the March collapse of two American regional banks.
“In my view, we are not in a banking crisis, but we have had and may still have a crisis among some banks,” Gorman said. “I consider the condition not remotely comparable to 2008.”
He added that there was “no doubt” that Morgan Stanley would acquire more companies in wealth management, though nothing was imminent.
Morgan Stanley shares have climbed 5.7% this year before Wednesday, outperforming the 16% decline of the KBW Bank Index.
David Solomon, chief executive officer of Goldman Sachs Group Inc., during a Bloomberg Television at the Goldman Sachs Financial Services Conference in New York, US, on Tuesday, Dec. 6, 2022.
Michael Nagle | Bloomberg | Getty Images
Goldman Sachs is scheduled to report first-quarter earnings before the opening bell Tuesday.
Here’s what Wall Street expects:
Earnings: $8.10 per share, 25% lower than a year earlier, according to Refinitiv.
Revenue: $12.79 billion, 1.1% lower than a year earlier.
Trading Revenue: Fixed Income $4.16 billion, Equities $2.9 billion, per StreetAccount.
Investing Banking Revenue: $1.44 billion
How did Goldman’s traders perform last quarter?
The answer to that question will determine whether Goldman exceeds or misses expectations for the first three months of this year.
Unlike its more diversified rivals, Goldman gets the majority of its revenue from Wall Street activities including trading and investment banking. With the advisory business remaining subdued because the IPO window remains mostly shut, it’s up to traders to pick up the slack.
Heading into the quarter, analysts wondered whether turmoil during March — in which two American banks failed and a global investment bank was forced to merge with a longtime rival — would provide a good or bad backdrop to trading.
That question was seemingly answered by JPMorgan Chase and Citigroup, both of which beat estimates in part because of better-than-expected fixed income trading. Goldman has one of the biggest bond shops on Wall Street, so expectations are high.
So far this earnings season, big banks have mostly outperformed their smaller peers, helped by an influx of deposits after Silicon Valley Bank’s meltdown. But since retail banking plays a small — and probably shrinking — role at Goldman, much more focus will be on how trading and investment banking fared, and what expectations are for later this year.
Separately, analysts will want to hear what has come of CEO David Solomon’s proclamation in February that Goldman was weighing “strategic alternatives” for its consumer platforms business. That has been interpreted as potentially selling off the GreenSky business it acquired recently or offloading credit-card partnerships with Apple and others.
And they’ll likely ask for details about Goldman’s part in helping Apple offer new savings accounts; the product launched with a higher interest rate than the bank’s own Marcus product has.
Goldman shares have dipped 1.1% this year before Tuesday, a better showing than the nearly 17% decline of the KBW Bank Index.
Jamie Dimon, chairman and chief executive officer of JPMorgan Chase & Co., during a Bloomberg Television interview at the JPMorgan Global High Yield and Leveraged Finance Conference in Miami, Florida, US, on Monday, March 6, 2023.
Marco Bello | Bloomberg | Getty Images
JPMorgan Chase is scheduled to report first-quarter earnings before the opening bell Friday.
Here’s what Wall Street expects:
Earnings: $3.41 per share, 29.7% higher than a year earlier, according to Refinitiv.
Revenue: $36.24 billion, 14.7% higher than a year earlier.
Deposits: $2.31 trillion, according to StreetAccount.
Provision for credit losses: $2.27 billion.
Trading Revenue: Fixed income $5.29 billion, Equities $2.86 billion.
JPMorgan, the biggest U.S. bank by assets, will be watched closely for clues on how the industry fared after the collapse of two regional lenders last month.
Analysts expect a mixed bag of conflicting trends. For instance, JPMorgan likely benefited from an influx of deposits after Silicon Valley Bank and Signature Bank experienced fatal bank runs.
But the industry has been forced to pay up for deposits as customers shift holdings into higher-yielding instruments like money market funds. That will probably curb banks’ gains from rising interest rates amid the Federal Reserve’s efforts to tame inflation.
The flow of deposits through American financial institutions is the top concern of analysts and investors this quarter. That’s because smaller banks faced pressure last month as customers sought the perceived safety of megabanks including JPMorgan and Bank of America. But the bigger picture may be that deposits are leaving the regulated banking system overall as customers realize they can earn higher yields outside checking and saving accounts.
Another key question will be whether JPMorgan and others are tightening lending standards ahead of an expected U.S. recession, which could constrict economic growth this year by making it harder for consumers and businesses to borrow money.
Banks have begun setting aside more loan loss provisions on expectations for a slowing economy later this year, and that could weigh on results. JPMorgan is expected to post a $2.27 billion provision for credit losses, according to the StreetAccount estimate.
Wall Street may provide little help this quarter, with investment banking fees likely to remain subdued thanks to the still-shut IPO market. CFO Jeremy Barnum said in February that investment banking revenue was headed for a 20% decline from a year earlier, and that trading was trending “a little bit worse” as well.
Finally, analysts will want to hear what JPMorgan CEO Jamie Dimon has to say about the economy and his expectations for how the regional banking crisis will develop. JPMorgan has played a central role in propping up a client bank, First Republic, which teetered last month, in part by leading efforts to inject it with $30 billion in deposits.
Shares of JPMorgan are down about 4% this year, outperforming the 31% decline of the KBW Bank Index.
David Solomon, chief executive officer of Goldman Sachs Group Inc., during a Bloomberg Television at the Goldman Sachs Financial Services Conference in New York, US, on Tuesday, Dec. 6, 2022.
Michael Nagle | Bloomberg | Getty Images
Goldman Sachs is scheduled to report fourth-quarter earnings before the opening bell Tuesday.
Here’s what Wall Street expects:
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Earnings: $5.48 per share, 49% lower than a year earlier, according to Refinitiv
Revenue: $10.83 billion, 14% lower than a year earlier.
Trading Revenue: Fixed Income $2.31 billion, Equities $2.14 billion
Investing Banking: $1.75 billion
How long will the investment banking drought last?
That’s one of the top questions analysts will have for Goldman CEO David Solomon.
While the fourth quarter was an ugly one for bankers — Wall Street rivals JPMorgan Chase and Citigroup each posted declines in investment banking revenue of nearly 60% last week — analysts question the odds of a rebound sometime later this year.
They’ll also want to hear Solomon’s views on headcount and expenses after the bank laid off up to 3,200 employees last week, as well as details about Goldman’s consumer operations as it scales back ambitions there.
Goldman shares have climbed 8.9% this year going into Tuesday’s trading, compared with a 6.7% advance for the KBW Bank Index.
Last week, JPMorgan Chase and Bank of America topped profit expectations on surging net interest income, while Wells Fargo and Citigroup posted mixed results. Morgan Stanley is also scheduled to release results Tuesday.
This story is developing. Please check back for updates.
Jamie Dimon, CEO of JPMorgan Chase, testifies during the Senate Banking, Housing, and Urban Affairs Committee hearing titled Annual Oversight of the Nations Largest Banks, in Hart Building on Thursday, September 22, 2022.
Tom Williams | CQ-Roll Call, Inc. | Getty Images
JPMorgan Chase is scheduled to report fourth-quarter earnings before the opening bell Friday.
Here’s what Wall Street expects:
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Earnings: $3.07 per share, 7.9% lower than a year earlier, according to Refinitiv.
Revenue: $34.3 billion, 13% higher than a year earlier.
Provision for credit losses $1.96 billion, according to StreetAccount
Trading revenue: fixed income $3.76 billion, equities $1.92 billion
Investment banking revenue: $1.57 billion
JPMorgan, the biggest U.S. bank by assets, will be closely watched for clues on how the industry is navigating an economy at a crossroads.
Analysts are expecting a mixed bag of conflicting trends from banks. Higher rates will help lenders earn more interest income, but some of that boost will be offset by larger provisions for expected loan losses as the economy slows.
Wall Street won’t likely come to the rescue. Investment banking revenue is expected to plunge 50% in the wake of frozen IPO markets and subdued deals, Barclays analyst Jason Goldberg said in a Jan. 11 note.
That will be partly offset by a 10% rise in trading revenue, thanks to a boost from fixed income operations, he wrote.
Of greater interest, perhaps, is what JPMorgan CEO Jamie Dimon says about the economy. The veteran CEO rattled markets last year when he said an economic “hurricane” caused by the Federal Reserve was headed for the U.S.
Shares of JPMorgan have climbed 4% this year, compared with the 6% rise of the KBW Bank Index.
